Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 696)
The Philippine Aerospace Development Corporation (PADC) is a body corporate and politic under the Office of the President of the Philippines created to establish a reliable aviation and aerospace industry, with succession for fifty years from the decree's approval.
The PADC aims to undertake activities such as designing, assembling, manufacturing, and selling aircraft and aerospace devices; developing capabilities for maintenance, repair, and overhaul; and operating air transport services including cargo and passengers on domestic and international routes.
The Corporation can amend by-laws, sue and be sued, enter contracts, hold properties and shares, borrow funds, invest in aerospace firms, form subsidiaries, submit policy recommendations to the President, cooperate with government and private sectors, coordinate defense-related activities, and perform acts necessary to achieve its purposes.
The Corporation has five million no-par shares: two million subscribed by the Government with an initial value of P40 per share, 500,000 shares each subscribed by the Development Bank of the Philippines and the Government Service Insurance System, and the remaining two million shares available for subscription by the government or government-owned corporations, ensuring government majority control.
Voting power for Government shares is vested in the President of the Philippines or their designee; for the Development Bank of the Philippines in their Chairman, Board of Governors; and for the Government Service Insurance System in their General Manager; shares subscribed by other government entities are vested in their respective Chairmen or chief executives.
The Board of Directors consists of ex-officio members: Executive Secretary, Secretaries of Finance, Industry, National Defense, Chairman of the Development Bank of the Philippines, General Manager of GSIS, and three presidential appointees serving staggered terms of one to three years; also, officials exercising significant voting powers with at least 9% stock ownership become ex-officio members.
PADC and its eligible subsidiaries are exempt from national and local taxes, duties, and fees for seven years from specified dates; they enjoy exemption from tariffs and import taxes on machinery and equipment and are additionally exempt from other duties on related transactions among themselves.
PADC is authorized to contract foreign loans up to one billion US dollars equivalent, negotiate and guarantee loans with foreign governments or institutions, with loans and related importations exempt from all taxes and restrictions, and interest payments exempt from withholding tax if the Corporation assumes the tax liability.
Appointments (except clerical and janitorial) are confidential or highly technical, exempt from Wages and Positions Classification Office rules, with officials entitled to GSIS benefits; employment of retirees is subject to laws; government officials may be detailed to PADC, receiving allowances or emoluments from PADC.
Shares can only be issued or transferred after being offered to the Government; any agreement transferring ownership or voting rights that impairs the Government's majority control is prohibited.